At last Malaysia’s Central Bank cut its interest rate to 3.25 percent from 3.50 percent after stubbornly stay at that level for more than two years since Apr 2006. Just like U.S. Federal Reserve once the cut started more cuts are in the pipeline as it signals economic problems. The rate cut should be welcomed and in fact was long overdue. If not for clear signs that businesses began to be affected, the Central Bank would not think twice about leaving it alone. Already JPMorgan Chase & Co, HSBC Holdings Plc and Aseambankers Malaysia Bhd think the interest rate could go as low as 2.75 percent by Mar 2009.

While a lower interest rate is bad news for fix-depositors it definitely helps people who are now serving housing loans, depending on the package chosen of course. Whether it can help small businesses by lowering their borrowing cost is yet to be seen. Lower interest rate is not the silver bullet because if the economy is bad enough even an interest rate of 0.5 percent would not help much, seriously. This is the best time government show how efficient and intelligent they are in managing domestic economy, not to mention attracting foreign investors. Your capability is judged during bad time and not during the waves of good time.

The recent RM7 billion stimulus package, 3% cut in EPF contribution for employees and now the interest cut are direct admittance by the government that the country has indeed sniffed the problem brewing fast hence the measures. So the big mouth that screamed the country will not plunge into recession no matter what is no longer true. And you better calculate twice before choose the 3% cut in EPF contribution option because you might ended up paying higher income-tax, not to mention your retirement fund would be less when it matures. In short the government is really short of money and the immediate plan drafted was to suck as much money from the public as possible. Billions of dollars could be collected from income tax derived from 3% EPF cut initiative and the revenue collected from current fuel prices. Expect more stimulus packages if things get uglier.

The year 2008 can easily be the year of bailouts. Started in U.S. global bailouts could skyrocket to trillions of dollars. People on the street are still debating whether the greedy financial institutions should be rescued because it could send the wrong signals that excessive lending is alright because Uncle Sam is waiting with huge piggybanks on hand. Earlier mind-boggling multi-billion M&As (merger and acquisition) are being called off for obvious reason. Today BHP Billiton Ltd., the world’s biggest mining company announced that it has abandoned a hostile $147 billion takeover bid for rival Rio Tinto Ltd. of which the bid value now shrunk to $68 billion only. Even the world’s largest carrier of LNG (liquefied natural gas) MISC Berhad has abandoned the RM3.2 billion ($882 million) takeover bid for oil services company Ramunia Holdings Berhad.

As we speak, amazingly there’re still some stupid bailout calls that does not make sense at all. It appears MIC fellow somehow found the gut to ask the government to bailout Maika by pumping RM150 million of taxpayer money to save the political party’s dying investment arm and to return 66,400 investors’ hard-earned money (cheated by Maika?) made famous by 1992 Maika-Telekom scandal. It would be very interesting if government decided to “award” the bailout much to the delight of Maika CEO Vell Paari (MIC President Samy Vellu’s eldest son). It would be another daylight robbery of your money to bailout Maika when in reality some greedy and corrupted clowns thought it was perfectly alright to steal money from estate workers who had pawned their family jewellery and withdrew their life savings to invest in the company. Shouldn’t they be in jail instead?